National Debt Tops $40 Trillion As Treasury Doubles Bond Buybacks

[0:00] Dano: Happy Friday, August 21st, 2026. We're all smiles here at Fermata Advisors because we're positive people, even if the federal government just passed 40 trillion in debt.

[0:12] Dano: My name is Dano Weir from Fermata Advisors and our private wealth arm, Sonoma Wealth Advisors, joined shortly by our managing principals to discuss crossing this very important round number for the national debt and what happened in the bond market this week. Seemingly not as a result, but perhaps in parallel to it.

[0:33] Dano: We'll also talk about how the war in Iran, Japanese oil, and bond vigilantes all coalesced into a historic extension of buyback operations this week. The U. S. Government is facing a spending cliff next year. What will they do when their obligations finally exceed their income? We're going to look at the biggest trading loss in history.

[0:54] Dano: It was recorded this month, which was more than... Double the second place on the list. And despite the Fed's attempt to control the bond market this week, Daren's got the charts to show the Markets calling Scott Fesson's bluff. Let's go.

[1:08] Announcer: The stock market, the economy, your money. What's the latest and what could be next?

[1:18] Announcer: Find out now with Fermata On The Markets. Straightforward financial market updates for the brands of Fermata Advisors, Sonoma Wealth Advisors, Fermata 401k and Fermata Tax. On The Markets starts now.

[1:39] Dano: As I said, the thumbnail is a little doom and gloom. The news is not always so great, but... We keep it positive anyways, because you have to. So Daren Blonski, Chris Sipes, CFPs themselves, both, they are the managing principals of Sonoma Wealth. And to keep a light attitude, Chris, we start things off this week with an inspiring quote from Homer Simpson.

[2:00] Chris: Yes, one of the great philosophers of our time. He says here, if you really want something in life, you have to work for it. Now quiet. They're about to announce the lottery numbers.

[2:14] Chris: With all the gambling that's going on these days, it seems very apropos, doesn't it?

[2:20] Dano: Doesn't it? It does indeed. Daren, we're going to talk about the bond market this week, so let's stick with the Simpsons for a moment. Tell me what this meme means. We've got Scott Bessett trying to throw, I forget that character's name. He's going to throw a party.

[2:35] Daren: He's going to sit at the bar and that's all he does.

[2:38] Chris: Is it Barney?

[2:39] Dano: Yes. Scott Besson is Moe, and he's trying to throw Barney out of the bar. It says U. S. 30-year at 5.271%.

[2:46] Daren: And he throws him out of the bar, and then Barney's back in the bar, walked in the back door, I guess. And U. S. 30-year is still at 5.271%. And that's kind of what happened this week in the 30-year bonds. I'm going to show this, and I don't want to steal the thunder yet, but Besson comes out and says, you know, we're going to buy more on the long end of the curve.

[3:07] Daren: And... Hoping to push down rates. And for a day, it kind of pushed it down. And then we actually ended up almost exactly where we closed up last week. So this is the narrative that the market's digesting and trying to figure out. And that is that has the Fed lost the ability to do what they say they're going to do, which is control the Markets?

[3:34] Daren: What are they going to have to do to keep control of the Markets. Which also plays into this investor sentiment that we see ferociously through investors, and that is the market always goes up. And I think on some levels, you have to argue that that's the case because the government's going to keep printing dollars.

[3:53] Daren: I'm going to show you a really cool liquidity chart system I built this week to help kind of assess what's really happening in the piping, and we call it liquidity of the Markets, because liquidity drives the Markets more than anything. These days, it seems. It's one of the factors anyway.

[4:11] Daren: But really, Besson comes out, tries to fix it, jumps on CNBC or one of the channels the next morning, tries to fix it again. Nothing really happens. The market says, yeah, we're not so sure you have control of the long end of the curve. See, the Fed controls the short end of the curve, but they don't necessarily control the long end of the curve.

[4:29] Daren: And that is the longer rates, the 30-year rates. And that's problematic for the Fed when they're In the U. S. Government, when they're trying to print more dollars, all of a sudden they are now paying 5.27% in interest. That pushes that debt level higher, and thus we crossed the $40 trillion Mark. And so some might say, big deal, we made more, you know, $40 trillion is no biggie.

[4:55] Daren: Well, in 2016, we were below $20 trillion. So since 2016, today in 10 years, we've printed over $20 trillion in U. S. Debt. That. Is going to hurt and it's going to come out somewhere in some way. And what the Fed is trying to do right now is burn the economy hot. That's why you're paying more money at the pump.

[5:15] Daren: That's why you're paying more money in food. And then they have to do things like Trump did today, which is announced, Hey, we're going to buy a bunch of beef because it turns out those tariffs I put on beef actually do push up the price of beef. So we're going to help everybody out, you Americans, and we'll buy some beef for you so that it pushes the price down.

[5:33] Daren: And, So you're starting to see this intervention behavior from the Fed because, frankly, when I say the Fed, you know, the executive branch or those departments semi-controlled by the executive branch are trying to do things to pull pressure off the consumer, especially walking into this midterm election cycle.

[5:54] Daren: So at this point, you should be concerned that there's going to be a washout if you're Trump and his people in. The House and the Senate, which will then make it very difficult for you to do much of anything once the elections happen. So lots of interesting dynamics going on. Hey, don't mean to be political here, right?

[6:15] Daren: Because we're not a political, we're not approaching this politically, but it's pretty tough at this point not to talk about how politics impact the Markets. Because even though we like to, as Americans, think that our government lets capitalism exist in its own... Environment and they don't intervene with capitalism, that would be naive to think.

[6:35] Dano: And by his own admission in that tweet, Trump said it's going to push the beef price down a whopping 25 cents a pound.

[6:44] Dano: Surely that will change everything.

[6:46] Daren: Gotta run out and buy your steaks.

[6:51] Chris: Shout out to Brandon Ducharme, who had, I thought, the funniest financial-related saying with that he said we were going to start to drain the Strategic Beef Reserve awesome tap that beef reserve for those who don't know we have a strategic petroleum reserve and that's how the.

[7:12] Daren: Trump admin is we've been dropping bombs on Iran has kept oil prices in a place that's palpable for us Americans is by bleeding out the strategic petroleum reserve to the pump Well Bad news, that's starting to get pretty low.

[7:28] Chris: As someone who consumes a lot of beef, I sure hope we have an SBF or SBR, Strategic Beef Reserve.

[7:40] Chris: All right, we'll go old.

[7:42] Dano: One second, Chris. I just want to shout out. I want to acknowledge our live stream viewers right now. We do do this show Fridays after 1 o'clock. It's like a 1 o'clock-ish. On our various channels, whether it's YouTube, Facebook, or Twitter. This is a live show, a live stream, if you're watching it live on Friday, August 21st, 2026.

[8:03] Dano: So please interact with the show. You can comment, ask us questions, give us reactions. If you do so live in the comments, we will talk about it on the stage, on the show. So this is an interactive show. Chris, we do have gold in front of us. In the United States, we're at the top, baby. We got the most. Maybe we start.

[8:22] Chris: Dishing out the doling out the unit strategic gold reserve here yeah well we've we've been talking a lot about gold and how gold has been money for a long period of time even though we don't actually operate on a gold standard any longer humans still technically seem to anchor to gold as as the real price of of currency and money and this chart showing the gold's share of central banks for central bank reserves.

[8:52] Chris: So even though we don't work off a gold standard anymore, it is interesting that central banks still feel like it's something they should hold to back all those digital zeros that they're pumping into the system. And I think it's instructive to know more about gold. I wouldn't say we're gold bugs in any way, but in a time, possibly, where we're entering into a time period of more.

[9:20] Chris: Inflation. If we go through something like in the 70s where gold was one of the top performing assets in the 70s, I think that people should educate themselves on how it works and how it tends to respond to all that liquidity like Daren was saying. Now, when Besant announced that Treasury buyback this week, we saw an instant pop.

[9:50] Chris: In both gold and Bitcoin, which was interesting. I mean, Bitcoin just seemed to suddenly jump. Now, there was also an announcement about more clarity on the regulations around Bitcoin, I think, at the same time. So maybe that was part of it as well. But it definitely seemed to trigger some action in those assets that tend to be sensitive to extra liquidity coming into the system.

[10:21] Dano: And Chris, let's get into that because that's a...

[10:24] Daren: Hold on, before we go there, let's be fair because I think this is important context for pulling us off the gold reserve, right? So for those who don't know, it used to be that we had to have corresponding gold to dollars, right? And the gold backed... Dollar and that's what gave it credibility.

[10:41] Daren: In the Nixon administration, they realized that if they kept gold and dollars linked, that they couldn't exponentially grow the Dollar base. And that was the beginning of the end for the Dollar. Mark my words, this is part of the end of the Dollar. There will be a transition at some point. All currencies in history have gone through this. How long the Dollar remains the reserve currency of the world. Who knows?

[11:07] Daren: It could go on much longer than any of us think. But when you debuckle the Dollar from gold, what you're effectively doing is allowing the government to print at will. So when it serves the US government to print more dollars, thus we have a runaway debt issue and $40 trillion in debt now. Gold kept that down because they had to have the corresponding gold to printing dollars before.

[11:32] Daren: When they got rid of it, that allowed... Our politicians to decide and do whatever they want. Thus comes the advent of things like Bitcoin, where you can't just print more of them. And that's where a lot of the value, which we saw Bitcoin go up this week, because when Besson comes out and goes, yeah, we're going to buy some more 30-year treasuries, the market says, oh, really?

[11:56] Daren: It means the Dollar is being printed even more aggressively than it was last week. Eventually, the Dollar doesn't have the value that it has. Eventually, American hegemony is debased because we've printed so many dollars. Again, it could go on for another 20 years, 30 years, 40 years. I don't know. But this process is the unwinding of the Dollar.

[12:20] Daren: We are seeing that in real time. And so it behooves investors to think about what other investments can I preserve my wealth in. Other than in the dollars. And Americans have had the benefit for a very long time of saying, hey, you know, American stocks go up. Dollar is always going to be strong. We're always going to control the seas. That's in question now, right?

[12:49] Daren: Moving from a unipolar power world where America runs around the world and controls the seas and trade and all that to at least a multipolar world, which we're seeing kind of unfold in Iran and we're seeing unfold in Russia and Ukraine, where other governments are saying, yeah, maybe you don't have the power you thought you had and able to attack us in different ways now because, hey, we can use drones to blow up your $100 million tanks with a $100 toy.

[13:24] Daren: That changes the whole military landscape. And Yeah, it's not about war, but ultimately it is our bombs and our weapons and our tanks and our ships and our planes and our military that forces the world to digest the Dollar as the reserve currency.

[13:42] Daren: If that gets challenged, people start to say, you know, we don't really want to play your game because every time we do things you don't like, you just print more dollars and there's nothing we can do about it. And thus, they look for other routes. The BRICS conversation was big during the Biden administration. It's kind of gone away now since Trump said, hey, we're going to squash that thing.

[14:03] Daren: And Russia is looking a little weak at the moment. But we are now a multipolar, multi-power world. And as a multipolar, multi-power world is more unstable. It's unstable for Markets. It's more unstable economically. It feels more unstable globally.

[14:20] Daren: And that's what lots of people are feeling when you watch the news. I can't tell how many times a week I talk to people. And they just go, what the F is going on out there? I can't make sense of any of this. Well, what you're seeing is going from a unipolar world to a multipolar world where power is more diffused and power is more interconnected.

[14:42] Daren: And there's different influences coming into the system. It feels very unstable. Markets are digesting that too. And thus, you're going to see the Fed doing things like buying the long end of the curve to try and per get the yields down so we can spend more dollars.

[14:59] Daren: Hospital dog.

[15:00] Dano: You know that Daren has returned from vacation and he's had a lot to say. He's ready to roll today.

[15:08] Dano: My guy, he's going. Yes, we are. Yes, we are buying back the long end of the curve. Chris, can we please get a decent explanation as to what even happened this week? Because it feels pretty significant.

[15:25] Chris: Well, when you say the curve, you're talking about the yield curve, which is if you were to plot out bonds over a long period of time because they issue short term.

[15:40] Chris: Very short term, you can buy a bond for a year or two, less than a year even, they're called bills. And then you've got kind of medium term, the five to 10 years, and then they go all the way out to 30 years. And so the long end is what everybody's talking about, which is the long term bonds are the ones that Besant was talking about purchasing this week.

[16:04] Chris: And what made everybody kind of raise an eyebrow was that the way that he was going to do it was by issuing more bills, which is the short term. So essentially issuing or borrowing on the shorter end of things and taking that money that he's receiving from that and buying the long-term bonds in an effort to lower the interest rate on the long end. Now, somebody equated this to using your credit card to pay off your mortgage.

[16:38] Chris: Which I thought was a kind of a funny way of putting it. But that's sort of conceptually, you're using short-term funds to pay off long-term funds, which also, you know, the longer-term bonds, a lot of them had been issued back when interest rates were a lot lower. So, you know, it seems like, to me as an outsider, I mean, I'm best in...

[17:07] Chris: Obviously a much more experienced trader macro trader so i'm sure he i hope he knows what he's doing to my little p brain i'm like this doesn't make much sense but but that's what he was issuing from the beginning from this week or said he was going to now you said only four billion of buying which we'll see in a couple of slides is really nothing it's it's absolutely insignificant But it was more the fact that he announced it to the market, that the market reacted to that in a big way in the different asset classes this week.

[17:47] Dano: So to clarify, he is issuing new short-term bonds, not official, but ish 5.271% to pay off older long-term bonds at like three something?

[18:04] Chris: Sort of. The short-term bonds are not at 5.2. That's what the long-term bonds were getting up to. So he was trying to intervene in that market to get that rate down.

[18:17] Chris: And so shorter-term bonds are less than that at the moment. But there are some existing bonds on the balance sheet already that would have been issued. At lower interest rates. So meaning that the government already borrowed that money on the long term at lower interest rates in the past.

[18:42] Chris: But that's going up steadily. And that's the problem is that as that interest rate goes up, it not only drives up the cost of money for everybody across the US and globally, but it also drives up the cost of money for the most important borrower in the world, which is the United States government.

[19:03] Chris: And it's driving up the interest costs. And it's sort of like a spiral that's starting to take off on itself because lenders, people all over the world, are looking at the U. S. And going, you have $40 trillion in debt, a large percentage of your GDP.

[19:21] Chris: You're running 6% to 7% of GDP deficit, so your current deficit is huge. Like, how much do we want to loan to you? At this interest rate, we want a higher interest rate because we're feeling like this is a little risky.

[19:39] Chris: And so this is what they call the bond vigilantes. And in the past, bond vigilantes have mostly applied to other countries, specifically like emerging Markets, because these governments will come in and start being profligate in their spending. The bond buyers, the investors will say, hold on, this isn't going to work.

[20:05] Chris: And we are not funding these spending plans at these interest rates. So the most... Famous of that, of those examples recently was in the UK when Liz Truss came out with her budget and the UK guilt skyrocketed in interest rates and she ended up getting booted very quickly because the bond market revolted and said, no, we're not funding this. We're not funding this plan.

[20:36] Dano: All right, well. So based on what we've discussed so far, how did that affect investor sentiment this week?

[20:42] Chris: Well, this is as of Thursday sentiment. And I think mostly when people answer this question, they're talking about the stock market, which has continued to keep going. And, you know, that's the most watched market. So most people, your average Joe, isn't going to care about any of this bond market stuff until it starts affecting the stock market.

[21:06] Chris: So as long as the stock market's doing well, pretty much nobody cares. And so that's what you're seeing here. I would say this is a reading of meh for most investors where they're not really feeling overly bullish or bearish. Now the CNN fear and greed index reflects that because it dropped to 52, which is neutral. It was 66 agreed last week. But then Bitcoin...

[21:33] Chris: Wow, I don't remember a jump like this reading in a while, but we went from 29 of fear last week. And I don't know for sure, but I'm pretty sure two weeks ago we were at extreme fear. But last week we were at 29 fear. We jumped all the way up to 62 greed in Bitcoin with that kind of overnight jump in the Bitcoin price after the Besson announcement.

[22:02] Dano: Daren? Did you jump up from the 20s to the 60s or have you felt the same about Bitcoin this whole time?

[22:09] Daren: What do you mean, did I jump up to the 20s and 60s?

[22:12] Dano: Well, we're saying in this survey, Bitcoin investor sentiment, you know, dramatic increase.

[22:17] Daren: No, I don't. I think a lot of the move, and you see this in Bitcoin a lot, is what happens is there's some type of little move that becomes exaggerated because of short squeezing. Where people who were shorting all of a sudden are forced to cover. And that forces all these buyers, right?

[22:36] Daren: Like we should start seeing a short squeeze right around, let's call it 80,000, 75 to 80,000. We'll see another massive candle up if it keeps going. I'm going to show you the close today and what I'm watching. But I don't think a lot of the movement is people just running out to buy it in this true sense of like they just want to be owners of Bitcoin, I think.

[22:58] Daren: What's driving that up is, again, these short squeezes that get covered and force people to buy or groups to buy. It also helps when the U. S. Government starts saying, you know, we're thinking about buying a lot of Bitcoin because they're reading the writing on the wall, too, with their U. S. Dollar.

[23:15] Dano: You know, Daren, if you only paid $100,000 a month, you could have known from Trump early that he was going to say the words Bitcoin in a press conference.

[23:23] Daren: You know, I was wondering how many people subscribed to that. I think last I saw it was like 10 people had bought it. Or 10 groups had bought it. But I imagine every hedge fund in the world is buying it at this point.

[23:32] Dano: Yeah, yeah.

[23:34] Dano: So Chris, let's look a little bit more at these bond buybacks and how it's going to affect things.

[23:40] Chris: So this from the Financial Times really reflects the fact that this was more of a, I would say for theater, than in actuality a thing that's going to move the needle. So you can see here, this is the planned issuance of, these are the 20 to 30 year treasuries. So these are long, considered the long end of the curve from the August to October quarter.

[24:10] Chris: And you can see that the net issuance is still many times larger. That's the dark blue versus the pink. The pink is the newly announced buybacks, 4 billion, which is literally nothing. And, and even I think the average Joe would, would know like, Hey, we're in $40 trillion of debt and you're talking about 4 billion, like not going to do anything.

[24:37] Chris: But it's sort of like them, you know, massaging the market a little bit of like, Hey, here's what we're, here's what we're doing and we're capable of. And we're, we're keeping an eye on these rates and we can, we can try to pull this lever if we want to, essentially.

[24:53] Chris: So Saw a big drop in rates on that announcement, massive drop. And then as we've discussed, the rates just took right back off and recovered, which is what we can see here now. This is as of yesterday and the rates are actually higher today and have pretty much erased all of the.

[25:14] Chris: Dropping rates from the Besson announcement in just a couple of days. Now, I think that is sort of a scary thing from a credibility standpoint, because then you look at the other thing that we just were talking about last week, which was the yen intervention, the US intervening in the Japanese yen.

[25:35] Chris: You can see that drop, that red drop from that intervention. And yet the Dollar is still chugging higher relative to the yen from a trend basis. When you include the trend lines there, yes, it helped reduce that relative strength of the Dollar. And why is this important? Well, Japan has to import all of its energy, basically, because they don't produce oil.

[26:11] Chris: I mean, this is... This is one of the main reasons why they got into World War II, because the U. S. Cut off their oil supply and they attacked because of that. Now, because they're an oil importer, everybody knows the cost of oil has skyrocketed since the invasion of Iran.

[26:33] Chris: Japan has to go buy oil on the market, and they have to buy that oil in dollars because most oil is transacted in dollars. And so they're getting the double whammy of an increased energy price, plus the fact that their currency is depreciating relative to the currency that they have to purchase that oil in. So it's creating a real pinch for them.

[26:56] Chris: Well, what are they having to do to fund that? They're having to sell U. S. Treasuries to fund it. And when you sell treasuries, that's putting more supply into the market, aka rising interest rates. So it's sort of like this perfect storm that we've been talking about over the last few sessions, which is you've got the government borrowing a lot of money to fund its ongoing operations.

[27:23] Chris: So they need money. You've got Japan having to sell one of the largest foreign holders of treasuries having to sell. And you've got the AI boom and all the hyperscalers borrowing every penny they can to build out the AI.

[27:41] Chris: Infrastructure. So there's a lot of demand for money, which is the net effect of all of these things is pushing interest rates higher across the board. And, that isn't a problem until it is, you know, and at some point you got to think that that, that rate gets to a point where it's like, okay, this is too expensive to fund certain projects. This is too expensive to go hire that next person.

[28:10] Chris: Borrow money to build that data center, whatever it might be. But most importantly, again, at some point, it's the most expensive for the largest creditor in the history of man, or the largest borrower in the history of man, which is the US government. And it's already to the point where the interest is going to be our largest line item as a budget line item.

[28:38] Dano: All right, Chris, well, which... Presidents, can we blame for that debt? We've got, there's a lot to pass around too. We're looking at U. S. Federal debt increase by presidential term.

[28:51] Chris: Yes. So this has been a reoccurring problem. And, you know, democracies in general have this problem because people vote for things, you know, they want to vote for politicians that are going to give them stuff. Right. And. Those politicians want to give stuff but not have to raise taxes.

[29:13] Chris: So whether it's more spending or lower taxes, the net effect is that there's a deficit. And that deficit, which is like you're borrowing more than you're bringing in over time, is piled up. And I had to really, I had to triple check this stat because I was just really surprised by this. But 29%.

[29:37] Chris: Almost a third of the U. S.'s current national debt was added when Trump was in office. So in two terms. Now, that's not all his fault, but I think it illustrates the power of compound interest because it's reached this critical mass now where the debt is building based on the interest. And that interest is getting larger and larger.

[30:09] Chris: So this debt monster has accelerated to the point where a third of all U. S. Debt almost has come from, you know, less than two terms of one president. So this is going to continue to be a problem unless the U. S. Does something to change it. And we talked about the routes that they've had in the past.

[30:31] Daren: Chris, I don't mean to interrupt you, but I just want to point out to everyone out there that Obama, Trump, and Biden, and now Trump, it doesn't matter what politics the president has. They don't have a choice. They have to.

[30:44] Chris: Print right so we if we remove our president biases and our political biases out of it like you can see the trend and yes nobody has a choice that's what i was just going to say their choices are default which let's hope they never go that route austerity massive austerity so massive cuts and we've you know who who's going to get cut what's going to get cut because we have most of our budget is, you know.

[31:13] Chris: Is already taken essentially with things that people are not willing to give up.

[31:18] Chris: And so the third option and the one that most governments have done over time is to inflate the debt away and to do things along the way like Besson announced this week, which was to try to kind of manipulate the Markets and try to keep things under wraps as that inflation does its work on the debt over time, try to outgrow it.

[31:43] Chris: Through inflation and growth is the route that most governments have gone. And that's probably the route that the U. S. Government's going to choose as well.

[31:53] Dano: I also just want to point something out looking at this, which is that I said last week, and I feel like this chart supports it, we are still running from the ghosts of 2008. And so much of Obama's printing, as Daren just said, was out of his control. He had to do it or the entire country was going to implode. And then that set us on a path that we still continue down today, Chris.

[32:18] Chris: That's right. And that's what this next chart is illustrating is that to Daren's point, every president's done it. They've done it roughly at the same rate. And it's only the fact that that 29% that Grok brought up is, again, only because the debt ball is so huge already. So whoever's president next. Is likely to have a huge percentage of the overall debt under them as well, because now it's reached this critical mass.

[32:50] Chris: But the rate of acceleration you can see under Bush was 8%. Obama was 9%, Trump 7.23%, and then Biden 8%, and then Trump 7.5%. So it's really been pretty consistent across administrations. But who knows? Like you said, it could keep going for a while. We don't know when that break point is, but it is getting to be a large albatross on the financial Markets.

[33:23] Chris: And meanwhile, the revenues have really stayed pretty flat. That's what this chart from the Cato Institute is showing. You can see the revenues, which is taxes, are basically flat across the board. Now, there's all these studies that essentially say...

[33:39] Chris: Somewhere between like 16 and 19% that kind of no matter where you put tax rates, that's essentially what the government ends up collecting over time through different loopholes and whatnot that people figure out. So even if you raise the income tax rates substantially to try to change this, the government tends to collect about the same amount over time. And then you see the the mandatory spending is in dark purple there.

[34:09] Chris: The net interest, which has become a larger and larger portion, don't forget that coming out of the 2008 crisis, when we were borrowing a lot of this money, interest rates were pretty close to zero. And so there wasn't as much of an impact. But the inflation started to take off after COVID, and interest rates have gone up since then, which is raising that net interest cost.

[34:34] Chris: And then we've got the discretionary spending. Which is also projected to continue to climb into the future. Now, who knows if that's what will actually end up happening, but it doesn't look like anything is stopping this train at the moment. Deficits are just current budget deficits. We're running massive deficits, so continuing to borrow to fund that.

[35:01] Chris: So more pressure on the bond market to do that. And then you've got... The war, which wars are expensive. And you can see here, this is a pretty cool illustration of the drop in tanker traffic at the state, the Strait Of Hormuz in orange. When that dropped off, that also coincided with a rise in the 10-year yield.

[35:25] Chris: Now, part of that could be coincidence and timing, but part of it is also that fixed income investors, when you are buying a bond, your chief concern is inflation. And because you are lending your money out only to get that money back later at a certain rate. And so if those dollars are less... Have less purchasing power when you get them back, it's less valuable to you.

[35:53] Chris: So you're very worried about inflation as a bond investor. When you buy a bond, you're most worried about inflation. Now, you might think of this from an individual standpoint, like, well, I don't like bonds anyway. Well, most bond investors are other countries. They are massive institutions that have to match you their liabilities and their assets.

[36:19] Chris: So think insurance companies and pension funds and things like that. These are investors that have billions, if not trillions of dollars they have to park somewhere and they have to do that in a way that they're fairly certain they're going to get their money back and at a specific time. So there are large investors that have to look into the bond Markets for their returns.

[36:47] Chris: And places to park money. It's not like you can just stick a few trillion dollars down at the bank and you're checking the cow. That doesn't work. So, so these investors are large, they're sophisticated, they understand the risks and, they're going to require a premium if they feel like the outlook for inflation is uncertain.

[37:08] Dano: And I just want to shout out all of our, I'm sorry, sorry, Chris, go ahead.

[37:11] Chris: Well, Trump said something that was very, I think, true this week in that he said something to the effect of the interest rates need to reflect the strength or the weakness of the country. And he probably didn't mean it this way, but that is very true. And so interest rates, and everybody's pretty familiar with this, if you're going to go borrow, an interest rate is going to be largely set on what is the market, but also...

[37:39] Chris: What is, who is, who is borrowing that money? And the more risk there is for that, who's borrowing that money, the more risk you might not get your money back, the higher the interest rate needs to be to compensate you.

[37:53] Chris: And so, when you're thinking about lower interest rates, you want to think about things like, financial strength, predictability, consistency, right? You want, you want people to feel more and more safe. Putting money into those things because the safer they feel, the lower the risk, the lower the interest rate. So hopefully that kind of makes sense from a bond market perspective.

[38:18] Dano: Definitely does. And I want to shout out our live stream viewers right now. You are watching On The Markets. And this is a live show. If you have any questions, feel free to drop it in the comments section and we will respond.

[38:31] Chris: Now, so far, stocks have not made any changes, really. Stocks If you're just watching the stock market, you'd think nothing is happening. But this is a great chart from, I think this was from Liz and Saunders. Oh, sorry, Ned Davis Research. So they say the S&P 500 stocks with dividend yields greater than the 10-year Treasury yields hit a record high of 63.4%, excluding the COVID-19 crash back in July of 2016.

[39:05] Chris: A decade later, that figure has fallen to less than 4%. So 4% of stocks have a dividend yield higher than the 10-year Treasury rate. That's the lowest since May of 2007. And so if you are a stock investor, that's where the concern starts to come in, is people look at bonds as competition for their money. If you can get a certain rate of return or a yield.

[39:35] Chris: In a bond, which is roughly the yield that you go into it at. So, you know, if you're going to buy a, let's say a five-year bond and it's going to pay you five and a half percent, likely, that's, that's going to be your return. And so at some point, don't know when that point is, but at some point people look at that and they say, Hey, I'm good.

[40:00] Chris: With that, I don't need to take the risk in the stocks. I'd rather put my money into bonds as an alternative. So more competition can be pulled from stocks and into bonds as a result of that.

[40:20] Chris: A counterpoint to that with this chart from Jeff Weniger is so far, he says one, two, three, four, five, six times. The 30-year Treasury yield has risen since 12-31 of 2023, and all six saw stocks go up. So you can't blame people for thinking like, hey, you know, stocks are the only game in town and forget about bonds, especially after being burned so bad in the bond market in 2022, the worst bond market in history.

[40:57] Chris: You know, it's not, it's not, it's not surprising. So it's probably going to take a little bit longer for, you know, that competition from bonds to really kick in. People have a little bit of PTSD.

[41:14] Chris: This chart from the FT was really surprising. Did you guys realize that that situational awareness collapse was as large as it was relative to some of the other big ones in history? The main one that I looked at was the long-term capital management. I remember when that one happened and people talking about it and what a huge collapse that was at the time.

[41:39] Chris: And relative to situational awareness, and these are all in 2026 dollars. So it's not like they're using inflated dollars to measure this. That situational awareness collapse was multiples of that. So a lot of that. Selling pressure that we saw in July in the tech sector was likely related to that situational awareness fund exploding.

[42:09] Dano: It's pretty remarkable when you take a look at how far he was up in certain things. And yeah, I knew that it was big, Chris, but I didn't realize it was the biggest ever.

[42:22] Chris: Yeah. And you know, there's a lot of, there's a lot of, other you know, kind of things under the surface that are bubbling, which again, nobody cares about as long as the stock market is doing well.

[42:35] Chris: But could be things that once the stock market isn't doing as well, people are like, Oh, well, obviously this thing happened. And one of the things we've been talking about is the private equity ownership of insurance and the kind of, you know, we talked about that Dodgers story last week. And this was from...

[42:55] Chris: Let's see, I can't read the Morningstar, showing the private equity firm on the left here, so Apollo at the top, their insurance company and how much of the assets are involved. And so what's kind of the concern here is that these private equity companies are buying into the insurance company.

[43:17] Chris: The insurance company is collecting premiums from the clients for things like annuities and insurance policies. And that insurance company is then taking those premiums and investing it in the investments offered by Apollo, right? Or KKR or whoever, right? Because those are private equity, private credit, et cetera.

[43:43] Chris: So it's sort of like this circular thing. And because it's not in the public Markets, it's a little more opaque than a lot of people are comfortable with. So, I don't know. That one, guys, I think is something to keep an eye on. Seems a little fishy. Seems a little fishy.

[44:03] Dano: Yeah, at this point, it's a Lakers story, by the way. It was the Lakers that were sold, but Chris, we're hoping perhaps the Dodgers will be sold as well.

[44:11] Chris: Freudian slip there.

[44:14] Chris: They're one in the same.

[44:16] Chris: We've got the Wall Street Journal. So, speaking of the kind of debt. Off balance sheet debt. This was in the Wall Street Journal, big techs spending, and they show on the top of this triangle here, the spending that is on balance sheet. And then we were talking about those leases, right?

[44:38] Chris: That I think it was Goldman that had quantified the leases and purchase commitments being in a 1.5 trillion that really aren't showing up on the balance sheet. That's the bottom part in blue there. So you A lot of debt in the system, a lot of debt on the government, a lot of debt on the private side. Make shell games all they want, call it different things and whatnot.

[45:04] Chris: But humanity is a story of us getting in too much debt and leading to cycles. So it's something to be aware of and be careful of as you're taking a look at your portfolios. Now, the housing market, this was very, very interesting from John Burns showing new home price premium versus existing homes.

[45:34] Chris: So this is another fallout of the interest rate environment where you get in this weird anomaly that a new House is selling at a discount due to financing essentially to older homes. So it's more expensive to buy a new home and so people aren't really buying them and so they're having to discount prices on them. Versus an existing home. So look at this chart showing just how extraordinary that is.

[46:08] Chris: It's extremely rare here according to John Burns. It looks like only one other time, maybe in the early 80s where this got close. Now interest rates were a lot higher at that time. So it's interesting that we're seeing that already with interest rates just kind of in a I guess more normal range historically. It's just they feel high relative to where they've been over the last decade or so.

[46:29] Dano: It's not a chart really, Chris, that Sonoma County can relate to because are there any new homes in Sonoma County?

[46:36] Dano: We don't have to get any of those.

[46:38] Chris: Good point. Good point. Now, I think it's just important to keep in mind as a lot of people like to buy single stocks. They talk about single stocks. And somebody had posted on Twitter that, hey, what are the reasons why Nike is down? Nike's down 75 some percent in the last five years.

[47:03] Chris: And this was like a real mind blower as was getting ready to get the kids back to school. And my kids, I don't know, maybe they're not normal, but they all seem to really like Nike. They wanted to buy Nike stuff. We had to wait in line for like an hour to get into the Nike store.

[47:19] Chris: So there's obviously other people that feel that way. I'd noticed there wasn't a line at the other brands. So I'm sitting there thinking like, How has the stock gotten crushed when there's all this demand? Like, you know, it just doesn't seem right. It's like, how could this be?

[47:36] Chris: And of course, people have all their reasons around mismanagement and, you know, ads that politically people didn't like and blah, But Meb Faber had a great point where he said, has anybody taken into account the fact that the price to earnings ratio was north of 40?

[47:55] Chris: And it's come down to half of that over that period of time. So essentially like what was the, the investor sentiment around that stock and how did that change? Well, it got cut in half essentially. And that's a big reason for a lot of the, the performance of the, of the stock.

[48:17] Chris: And this is important when you look at stocks that are trading at sky high PEs, cause really 40 or 50 seems pretty pedestrian compared to some of these AI stocks.

[48:29] Chris: Even Walmart this week got crushed after they talked about the fact that their revenues are so far down.

[48:38] Chris: They haven't had revenues this low in I think it was like six years or something like that. And stocks like Walmart and Costco are trading at some pretty lofty price to earnings ratios.

[48:49] Chris: And so if people adjust If people adjust their feelings about those particular companies and that price to earnings, what are people willing to pay for those earnings? Adjust down. It can be a huge headwind for the stock, even if there's still that demand.

[49:06] Chris: And so it's something to keep in mind as the fundamentals will have an impact on what happens in the long run.

[49:17] Dano: And Chris, we've been talking obviously a lot about bonds this week. And the action in the bond market, we'll look at the charts here in a moment with Darren. But I wanted to share with our listeners, our clients, that if this is feeling a little bit over your head just this week as it would so happen to be, we dropped our bond explainer episode. So we've been teasing it for a couple of weeks.

[49:41] Dano: Chris, it is out now. It is getting just absolutely. Crant crushed on YouTube right now just the views are going through the roof i'm sure and Jokes aside, if you've ever really wanted to dig into what is the bond market, how does it work, what is the basics? I know nothing. Can someone start me from zero? Chris and I sit down on our other podcast, It's All Money, and look at exactly how bonds work.

[50:09] Dano: The size of the global bond market is massive. And you can learn a little bit more about that. That episode is live now on our YouTube channel. And also on Apple Podcasts and Spotify. So wherever you found this show On The Markets, you can also find our other show, It's All Money. So I wanted to give a shout out to that episode. Without any further ado, Mr. Blonsky, let's look at some candles.

[50:42] Dano: Darren, your mic is on mute. I don't know if you can hear me.

[50:45] Daren: I, man, I just, my whole intro was so good, I just missed it.

[50:50] Dano: Well, your cat heard it. So let's replay it one more time.

[50:54] Daren: All right. Well, as always, we start off with the S&P 500. So what is the S&P 500 for our new listeners? It is the largest 500 US-based stocks. Is it the whole market? No. Is it a good barometer for the stock market? Yes. And it's just one part of the market.

[51:11] Daren: And I think all too often we zero in on the market, meaning it's a representative of the whole economy. It is and it isn't. What are we seeing on the screen? Two weeks ago, we had this huge breakout in this green candle right here. Last week, we went higher, and then this week, we came back in.

[51:27] Daren: Not particularly concerned with this candle. In fact, it might actually be a good little correction we're seeing here because you could argue that it came into this zone and tested this area on the weekly candle and this 760 zone and found support, right?

[51:46] Daren: It didn't close at the bottom, didn't go below it. When I get concerned if we drop below that 760 level on the S&P 500, then that breakout is denied. That could have been a topping candle for a duration of time. So let's hope we hold on to this support area.

[52:03] Daren: Let's look at the SPX because often the larger number is quoted, but if you hear the news talking about, oh, it went below 7,624 on the S&P 500, That's an indication that yeah we're probably going to head lower we've got this red line here this is the simple moving average the 20 days simple or this is the weak one we're looking at the weekly moving average moving up and supporting this continual move higher this will likely act is support if the market does come down so we want to watch that's right now 7,460 and change that's where your support area is if we were to lose this spot.

[52:47] Daren: If we look at the daily candle, we can look at the week. And so this being the Friday candle, Thursday candle, Wednesday candle, Tuesday candle, and then a big gap down lower here on Tuesday. This was the Monday one. So we have five days here of market action. Notice this 20-day simple moving average is coming up and supporting that.

[53:11] Daren: That's just a psychological number for the traders, the people who are in the market all day, every day. What does that mean for mom and pop investor of America? It just means that right now it's in a correction phase for this week. We're finding support. We did close in support. I don't see anything to be concerned about, even all this bond talk out there. The market is not saying, oh, dire straits, we're in trouble.

[53:37] Daren: What it's saying is we broke out, we came in, we tested support, we held support. And that could be a really good sign of things to come. Again, it's got to confirm, right? We held support, now we have to confirm support, and that will come next week. We'll watch what happens coming back into the market when the market opens, or at least the after-hours Markets, on Sunday at 3 p. m.

[54:02] Daren: So this is the cap-weighted index. We often talk about the heat map, and this is the heat map. If we were to break it down, that's... Showing after this due one week performance. So this is what happened to the largest 500 US-based stocks this week on a capital weighting, right? So cap weighting means the bigger squares.

[54:24] Daren: There's more money in that company. One of the things Chris and I have been concerned about for a long time is this NVIDIA Microsoft, Apple, Google, Amazon, these big companies and how much of the overall market they are taking up. And when those come down, everything else gets washed out with it. And that's obviously problematic.

[54:47] Daren: All these other smaller companies have to do a lot more work to keep up with these big companies when they go, what the tide comes out of them. And that's the risk, right? There's a concentration in the market around AI. That's when people, this is what graphically or from a visual standpoint, a bubble looks like, right?

[55:05] Daren: You don't have a lot of even spread. The truth is we're in a bubble more often than not in a bubble, meaning we move from bubbles to bubbles. It's rare that we're just hanging out in homeostasis in the market. That's more a fallacy. What we tend to do is transition through bubbles. So ideally, we would see air come out of these big ones and flow into other parts of the market.

[55:29] Daren: That would be a stable market. That's usually not the case when they get this big. So obviously, we're going to dial in, keep a close eye on what's happening out there. And one way we do that is we look at the RSP.

[55:41] Daren: And so this is if we were to take those 500 different stocks and break them up into equal chunks, we don't give more credit to NVIDIA or Microsoft. We give every company in the S&P 500 the same amount of credit in that heat map. And what you're seeing right now is a pretty stable move upwards in the market on the daily. And we look on the weekly and you see something similar.

[56:03] Daren: You wouldn't want to bet against this market. Ignore all the news, people, because guess what? The market doesn't care and the market is going to do what the market wants to do. And we saw that this week with Besant trying to stimulate the long end of the curve. So what does that exactly mean when we say stimulate the long end of the curve?

[56:24] Daren: Well, let's look at something called the global liquidity tracker. So if you think about the Markets, there's plumbing in the Markets. And plumbing in the Markets is how many dollars, how easy is it for organizations to get cash, for people who need cash to get cash. And the Federal Reserve and U. S.

[56:44] Daren: Department Of Treasury and other central bankers around the world have ways to free up liquidity, to make it easier to transact, to move money. Through their accounts. And so this global liquidity tracker tracks a bunch of different items that tend to signal and flag liquidity in the Markets. And ideally, for a growing and improving market, we want to see a looser monetary environment versus a tighter monetary environment.

[57:10] Daren: If it's tighter, it's harder to get dollars, cash, harder to transact around the world, harder to move economically. So think of the global liquidity tracker as how much, you know, how much grease is moving through the system. Are the gears getting oiled in the system?

[57:30] Daren: And right now we're kind of in a neutral to loose zone, which is good. Like market tends to do better. And so you can see how the S&P, which is this line here, has done over time based upon what liquidity is. Blue being there's a looser accommodations, red being there's tighter accommodations. You can see here's a perfect example.

[57:49] Daren: It's not a perfect correlation, when things are tighter you can see the market has a harder time going up when things are looser the market tends to move up in a stronger pulse right so it's the pulse of that liquidity through the market and that keeps the gears going so that a cycle can extend on further and these are the different elements that drive that pulse in the economy right so us net liquidity the broad Dollar index, high yield credits, and overnight funding.

[58:24] Daren: So there's two elements that are tighter and two elements that are looser, thus putting us in a neutral zone right now. Besant saying, hey, we're going to buy the long end of the curve, that's putting dollars into the system. That's creating a looser monetary system that's moving debt onto the balance sheet of U. S. Government. More painful long term, but in the short term, that gives the whole economy some stimulus.

[58:47] Daren: Lists right and so these things don't hit the market liquidity doesn't hit the market and then overnight everything just goes to the moon it takes a while to get through the system and so we look it out on a dated you know how long does it take over like a 13 week period and you can see this gold versus global monetary supply which is interesting so gold has gone down but global monetary supply has gone up so those calling for a positive correction And.

[59:15] Daren: For gold and meaning it's been in corrective phase and now it goes back up the over time gold tends to track with global money and we went up really fast faster than the global money supply was going up and then now we're seeing gold go back up so if Besson says hey we're going to print a bunch of dollars and buy the long end of the curve naturally gold is going to go up because it's tracking and correlating with global money supply That's an important signal.

[59:44] Daren: So you saw gold and Bitcoin go up this week because people say, oh my gosh, we're going to print more money. We're at $40 trillion. This is insanity. And well, just naturally it has to. Typically follow that global money supply, and it goes to different corrections, but the correlation is fairly consistent.

[60:02] Daren: So the yield curve, what is the yield curve? This is an example of what the yield curve is. So if we look at this is the interest you pay for a one-month bond, three-month, six-month, one year. We had been in inverted yield curve, and it's flattened back out now to its straighter, but this is the long end of the curve.

[60:21] Daren: This is what we're talking about, buying, bringing that down. Why does he need to bring that part of the curve down? Because if he doesn't bring that part of the curve down, the debt the U. S. Has goes exponential, right? Because we have to pay the interest on the debt. And so in theory, the government can print more dollars if they can control the interest, right?

[60:46] Daren: Because if you have to pay more in interest, then every Dollar you borrow, every Dollar you print costs you more. And you can see the U. S. National debt calculator is above $40 trillion. $40 trillion.

[60:58] Daren: That's why it was kind of a joke in some ways, in my opinion, when, well, not a joke, I guess we shouldn't make light of it, but when Elon Musk was dozing, like, no politician can stop this and live to fight another day. Because the only way you stop it is you start pulling back on the largest budget items, which are Medicare, Medicaid. Social Security, defense and war. That's it.

[61:26] Daren: Everything else you do is going to be like drops in a bucket of water or in a lake to trying to change this. So really the only option that the government has is to inflate away how we're spending money. And that's why sitting on money in cash is an incredibly bad idea right now because it. It's showing you that inflation is real, whether they report it right or not.

[61:53] Daren: We could debate that to no end. The fact of the matter is they have to inflate us out of this. There's no other option. Well, I guess there are other options, but not in our political system, because the minute someone stops giving people their Medicare and Medicaid checks or their Social Security or we stop the defense industrial complex, all the wheels come off the bus politically.

[62:14] Daren: No one can last through a midterm election or a regular. Four-year election. So they all have to do it together, whether it's Democrats or Republicans, they all are in cahoots together because that's what and how their job survives.

[62:31] Daren: Now, they want us to fight amongst each other over all my beliefs are better than your beliefs about politics, whatever. But at the end of the day, they're all sitting in the room saying, we got to keep spending people because if we don't spend, none of us are getting reelected. That's the stupidity of it all.

[62:47] Daren: So not to get off on a political tangent there, but it's very important to understand that that's the machinery driving this market. And it can't stop. There's no way for it to stop. The only options to inflate away and the only way to beat inflation historically is either through equities or through stuff like gold and commodities, because those are the things that go up with inflation.

[63:12] Daren: And if you don't use that as your foundational premise or thesis. And how you structure your investments and think about your investments, and in turn, you just pile your money into the bank, you're just watching it get eroded in real purchasing power.

[63:30] Daren: So that's why the stock market continues to float up, right? Because as they inflate and as there's more dollars printed, it has to go somewhere. And it funnels out. You can't just print dollars out of thin air and have it not go somewhere. It has to come out somewhere. So folks, I think inflation's here to stay. I don't think whatever they're going to tell you, I don't think we're going back to the no inflation days.

[63:53] Daren: There's no choice now. We have crossed a psychological barrier in the economy. We could go to $80 trillion. We could go to $100 trillion in debt. I don't know, but at some point, the wheels come off this bus and no politician is going to sit there and make the wheels come off the bus. They're going to keep trying and they're going to do all kinds of things they can do.

[64:18] Daren: To survive because the power that stays in power will try to stay in power power in power stays in power the the the i think it was Madison Chris do you remember the quote madison about government it's like what was that quote it's a famous not not the specific one you're looking for yeah anyway yeah you know it's not a great quote about you know power that you know whatever's in power stays in power and it perpetuates itself and they will and so i expect lots of things to happen, right?

[64:50] Daren: Like I expect to see lots of yield curve control behavior. I expect to see things like, well, I've never done that before. And so Chris and I and Dan could just sit here and be like, well, there's a first folks. We expect to see that happen.

[65:04] Daren: So now let's take a look at gold. And what I was talking about with gold and we're looking at the weekly chart, we're three weeks up straight and see, we broke above that red 20 period moving average. I wasn't sure last week where this was headed, but then this week we powered through that.

[65:18] Daren: 20-week average. It's back on for gold. So this was a corrective phase. Now we're moving higher. That's saying dollars printing, inflation's still hot. They're going to keep printing. They can't change that. When we look at the.

[65:35] Dano: 30 years- Before you move off gold, can you go back to gold for a second?

[65:38] Daren: Sure.

[65:41] Dano: Take me back to that huge red candle down where it feels like- And I think that was in February, maybe, where it feels like if you're, because our show is for our clients and for prospective clients, if you're in gold at that time, it feels like, man, I got in at the top.

[65:59] Dano: This is just tumbling and you see it continue to tumble. And that's how you're feeling this whole time. Tumble, And now look at these last two weeks, Darren. I mean, just that's the perfect example of when you're in the midst of that huge red drop that. The big red one down, look what can continue to happen.

[66:21] Chris: Well, yeah. That's when they announced Warsh as the chair, right? And so the market took that as, oh, man, this guy is going to come in and shrink the balance sheet.

[66:34] Chris: He's a hawk, you know? And it seems like over the last couple of weeks, the market's like, maybe not, maybe not.

[66:42] Daren: But that's exactly my point, Chris, right? Like, you know, these politicians can come in and say, I'm a hawk and I'm going to stop the printing machine. They don't have a choice, man. They just don't.

[66:57] Daren: Because there's only so much down the politicians can take before they get booted out of office. And the general public just doesn't understand economics enough to know that we're all driving along on a school bus headed for a cliff.

[67:14] Daren: But at the end of the day, no one wants to care enough, right? And you can't convince us all because of the theory of prisoner's dilemma that we should all stop spending, cut our debt back, go through a period of difficult times, support our politicians through that difficult time.

[67:32] Daren: And who's going to sign up for that? Said no one. So we're just going to keep on spending. We're going to keep electing people that will keep on spending and pumping the Dollar more and more. Until it doesn't work anymore.

[67:46] Chris: Until it's broken. Once heard, gold is kind of like a measurement of the credibility of the monetary authorities, essentially. And I think it's a bit confusing right now when the message from Warsh was, we're going to listen to the Markets, you know, the market's going to price the cost of money more.

[68:07] Chris: And then not even, you know, a couple weeks later, a few weeks later, we've got the Treasury saying no. The bond market has it wrong. They have the wrong price. We're going to put our thumb on the scale and, you know, get the right price. So it's a very mixed message coming from the monetary authorities at the moment.

[68:28] Daren: Yeah, I mean, I guess I would differ slightly. I don't know if it's mixed as much as it's like they're going to tell us something because they have to toe the political lines to keep the base alive. And do something completely different when it's a closed door, right?

[68:48] Daren: And that's, I think it was Leah Koka, and I was reading his biography years ago, and he had taken a bailout for Chevy or Chrysler, I forget which one it was, and he took this bailout to save the company, and he went to Reagan, who's looked at like one of the fiscal hawks of all times, right?

[69:10] Daren: And he goes to Reagan, he brings the money to Reagan. And years after Reagan, he passed. So there was no like political downside at this point. Like, hey, we want to pay you back or something. And the story goes that like Reagan laughed at him.

[69:23] Daren: Like, are you kidding me? Like, we all have to print, man. And here's like, you know, the trickle down of trickle downs in the hawk of the hawks. The reality is they'll say one thing and do a completely different thing when it comes to them surviving politically.

[69:40] Dano: It was Chrysler.

[69:41] Daren: It was Chrysler. Okay. Yeah, I thought so. So gold takes off Dollar printing, and then there's this little thing called Bitcoin.

[69:50] Daren: That just prints one of its monster lowercase god candles it just rips right i mean just massive move and if you look at this long-term trend line up like it broke below this and everyone's like oh this is over because in the past it cleaned it up pretty quick and then you get these candles that just move hard and fast.

[70:14] Daren: And people who have been putting some of their assets in Bitcoin for a long time understand this and they just let it be. But when Bitcoin tends to rip, it just rips. And then everyone starts investing in here and then it falls apart.

[70:28] Daren: Lots of memes going on all over the internet last couple of weeks on this one. But you can see it looks like we're going to close at five o'clock above this long-term uptrend line. And we did all that in one week.

[70:45] Daren: And so people use this particular asset class as a way to preserve some of their capital or think they are. Who knows if it really will. You know, they know that these big candles come in and you just ride them and stay in them because when they move, they move.

[71:00] Daren: And then ETH, which is like kind of the number two out there, you can see printed a monster candle too. I actually like this candle more than even I like the Bitcoin candle because Bitcoin hasn't cleared above.

[71:14] Daren: 82,500. When it clears above that, I'll be very convinced game is on because this double bottom here that it's creating, and then this is the neckline of that double bottom, plus there's going to be a ton of resistance right in this zone.

[71:29] Daren: And I want to see that break through, then the risk is to the upside. Right now, I think there's still risk to the downside. Technically, you could also say that we're technically still in a downtrend.

[71:41] Daren: We just correct and went up into resistance. So I want to see this pattern fall through. What's different on the ETH chart, though, is you could still technically say we're in a downtrend here, right? Because we haven't cleared above something like that. Let's call it 2600. But you can see this double bottom pattern here on the charts.

[72:04] Daren: There's that double bottom, and we broke above that neckline. So if we close... Above let's call it 2400 on ETH game on in the alt space which would be interesting to see how that flows through all of the Markets.

[72:23] Dano: Darren I gotta say I'm not surprised to see that from Bitcoin this I wouldn't say I would have called it this week but just from this is anecdotal my opinion but I'm always reading the vibes I'm always checking the narratives I'm following what's being talked about and Bitcoin had a Well, I wouldn't call it a hot girl summer.

[72:42] Dano: I think last week we were saying it just felt very much on the sidelines and just not even anything to talk about, like do something, do something, which seems to be the times when all of a sudden it comes out of nowhere and prints, as you said, a G. O. D.

[73:00] Daren: Well, in the teenage world, since I know how much you love the teenager slang, we would call this a glow-up. And right in time for back to school, Bitcoin had a glow up.

[73:16] Daren: Oh, good times. So 30-year, let's talk about 30-year and what's happening. So this is that, going back to the yield curve, right? We talked about the yield curve here, and this is that 30-year. What does that look like on the charts?

[73:31] Daren: And we go back to the charts. Here's that 30-year and it moving. And you can see this. 5.2% was an issue back in last October. Is that 23? No, that's October of 23. What happened in October of 23, guys?

[73:52] Daren: Trying to think of my history here. AI. AI.

[73:58] Chris: AI. I think that was when ChatGPT was announced, if I remember right.

[74:04] Daren: Interesting. So that you could see that rate. So some something happened there that push rates down big time. And then it went through this double bottom. And now it kind of went along and we broke above that neckline in this basin. It's going to take a lot more than Besson coming on one news clip to get this 30 year to go down.

[74:26] Daren: And that was the whole joke of the Simpsons meme we started the show with. Like from a chart perspective, this is a mean breakout. This is puppies going higher, and it's going to be very difficult to control that.

[74:39] Daren: Now, I'm not saying that they wouldn't be able to, but I think at this point, we need to accept that we're looking at a regime and a time in history that's going to feel a lot more like the Carter administration years. And if this rate keeps going higher, Trump is going to die a burning political death.

[75:01] Daren: Things are not going to go well for him in the midterms. Things are not going to go well for him in the general election. But even worse, whoever takes his place is going to have a whole world of hurt. It's going to be very painful in this area. And just this alone going up. I expect to see a whole lot of political wag the tail going on.

[75:26] Daren: You guys ever heard that term, wag the tail, wag the dog?

[75:31] Dano: I have, and I've even seen a film called Wag the Dog. Well, there you go.

[75:34] Daren: So be it known, start looking out for the wag the dog, because if rates go up, politicians don't have a lot of options. People get pretty unhappy. And we are literally this week printed one of the worst real estate.

[75:50] Daren: Markets in history worse than 2008 crisis and this is just with rates at 5.2 it can go a whole lot higher and get a whole lot worse now i like to think about abundance and i like to have abundance and how i think but hey i gotta call the tape how i see the tape and that's the tape you're looking at this is going to be difficult for Besant and Trump and the Democrats to control this and unless they get this thing under control they're all gonna find themselves looking for a job in the soup line, which wouldn't be really a bad thing.

[76:24] Daren: I'm in favor of firing all politicians on a regular basis, personally.

[76:29] Daren: I don't care what their slant is. All right, so oil. Talk about oil.

[76:38] Daren: We're up in that above 80 zone, right? And we're approaching upward bounds, so I think things start looking for calming things to happen. If this keeps going higher, but what I've been talking about for a couple of weeks is this kind of 80 zone between 80 and a hundred is kind of the, you know, the, the we're at war. No, we're at peace zone.

[77:02] Daren: We go up here. We're, we're at peace. Go down here. We're at war. Because actually the Iranians and a lot of other powers that be in the world have a vested interest in keeping oil higher, right? They don't want it to fall too low. If it falls too low, that means something's not going right.

[77:18] Daren: And a whole lot of people are not making a lot of money and they're not extracting our out of our pocket. And guess what? They're not inflating. They're not inflating away, which is inflation. And if they're not inflating away inflation, then we have a really big problem at $40 trillion. So they have to keep inflation burning hot. And the powers that be all have to keep that going.

[77:39] Daren: Now, I'm not one that thinks tinfoil hat, that this is all controlled and there's someone pulling our puppet strings. But independent actors, if— If I show you what the incentives are, you'll see the behavior. And fundamentally, there's incentives to keep oil higher, but not too high when it comes to the way the global industrial complex works.

[78:04] Daren: Take a look at Dollar because that was another big story this week with Dollar coming down. So what Besant's trying to also do is devalue the Dollar. We saw the DXY, which is a basket of currencies against the Dollar, go down. So the value of the Dollar against seven other currencies went down this week.

[78:21] Daren: We're now below that 20-period moving average. They want that. They want a lower Dollar. It makes it easier for a lot of our companies to continue to export. And so when we look back at that RSP chart, where every company on the S&P 500 is given, all these small companies are given a weaker Dollar, they can all export.

[78:42] Daren: Easier, right? And the lower we go into the stock market, mid cap, small caps, a lower Dollar makes that easier, especially when interest rates are really hard to do business. So by keeping that Dollar down lower, we can give the US companies a little bit of stimulus through this moment in history.

[79:01] Daren: Let's take a look at 10-year because everything's pinned off this 10-year. And you can see same thing with the 30-year, we're pressing higher. And it's getting into you area where I would expect to see extracurricular activities happen from our government to try to control this thing like we started to see this week.

[79:21] Daren: Just take a look at NVIDIA because it's the biggest stock out there. It kind of rules the day and you can see it ran into resistance this week right here at 228. Could be a double top forming. I don't know. We want to see it break above 228 to keep the party going.

[79:37] Daren: Really important to watch. NVIDIA and make sure that party keeps going so that this this bubble we have keeps printing Well, I think we've overkilled it here today, boys. I don't think I have anything else.

[79:50] Dano: I got one more I want us to look out the door since we're talking about NVIDIA and Chris, a little bit to what you were talking about with Nike previously.

[80:00] Dano: When we do this show, we often will bring up brand names, huge heritage-type stocks, and we'll bring them up often as an example of one that's going to be going nowhere because the business is so old, you know exactly about what it's going to do and why something newer like NVIDIA has all the growth potential in the world, potentially.

[80:23] Dano: Darren, would you please pull up because we've mentioned it so many times on the show. Can you please pull up Coca-Cola for me? Because I looked up Coca-Cola this week, year to date, and was absolutely stunned to see that it was up 30% this year.

[80:48] Speaker: Wow.

[80:50] Speaker: So let's see. So this was, if we look at Coke. And we look at info line, we can say, okay, here's the beginning of the year is the fifth.

[81:00] Speaker: We'll call this the beginning of the year. And you look at it, 33% up for Coke.

[81:09] Speaker: It's so crazy because I feel like people, again, this just goes to show like what a trap investing is. Like we all make decisions about investing and like think things are doing better or worse in our own perception. But like my perception, maybe it's just kind of living in Northern California where people tend to be fairly health conscious. Like who drinks Coke anymore, right? And well, apparently a lot of people do.

[81:33] Dano: So we've mentioned it just so many times and we're sitting around talking about, yeah, well, you know, you think about a stock like Coke, blah, I got to give Coke its due this week. It's having a pretty good year.

[81:46] Dano: Well, I think we will leave it there. I want to thank everyone for checking out the show. It did go a little bit long this week, but there was plenty to talk about. That's a good thing. Thing. We hope you've learned that is the goal of our shows is education.

[81:59] Dano: We do this for free for you to give our perspective on the market, see what we're tracking, and we look for your feedback. Wherever you found this show, make sure you subscribe, whether it's on YouTube, Apple Podcasts, or Spotify. That way you'll be able to catch future episodes of the show.

[82:16] Dano: Also, specifically on YouTube, make sure you hit that bell and it'll give you a notification when we are live and when we have new videos. You can learn more about our firm at SonomaWealth. Com. For Darren Blonsky and Chris Sipes, I'm Dan O'Weir, and we will see you next week On The Markets.

[82:33] Chris: You're up to date with Fermata On The Markets. Learn about how the Fermata Advisors family of brands can help your family and business in finance. Sonoma Wealth Advisors, a comprehensive, holistic finance solution offering financial planning, asset management, and tax planning. Take our free wealth analysis now at SonomaWealth. Com.

[82:55] Chris: Fermata 401k, business retirement solutions for small and large companies with a fiduciary commitment. Learn more at Fermata401K. Com. Fermata Tax, personalized tax services for yourself, your family, or your business with an emphasis on efficiency. Find out how at FermataTax. Com.

[83:17] Chris: If you haven't already. Like and subscribe to Fermata On The Markets on YouTube, Spotify, and Apple Podcasts. Fermata On The Markets features human hosts, editors, and voiceover talent. Music by Dr. Delight on Soundstripe, voiceover by Joan Alloway Nash. Thank you for listening to the very end. We appreciate diligent viewers and listeners.

[83:42] Chris: Fermata Advisors, LLC is registered as an investment advisor with the SEC and only transact business in states where it is properly registered or is excluded or exempt from registration requirements. This content was produced by Fermata Advisors, LLC, DBA Sonoma Wealth Advisors, DBA Fermata 401K, DBA Fermata Tax.

[84:04] Chris: The opinions expressed by Fermata Advisors, LLC on this show are their own. Information presented on this program. Is believed to be factual and up to date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed.

[84:20] Chris: Discussions and answers to questions do not involve the rendering of personalized investment advice, but are limited to the dissemination of general information. A professional advisor should be consulted before implementing any of the options presented. Information presented is for educational purposes only.

[84:38] Chris: And does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for any individual.

[85:01] Chris: Viewers and listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.